Back in December, to the muted chagrin of some senior shareholders, Woodside’s Peter Coleman said he was “looking forward" to a simultaneous pursuit of Australia’s Browse, East Timor’s Sunrise and Israel’s Leviathan liquid natural gas projects.

In announcing the $US1.2 billion purchase of 30 per cent of Leviathan, Coleman assured the market that “growth would be the first cab off the capital allocation rank".

My, how things have changed.

Having been fully costed at $US45 billion, Browse has been sent back to the drawing board while progress on both Sunrise and Leviathan continues to be clouded by local political constraint.

News that
Woodside
is to pay a 63¢ a share special dividend and has committed to a dividend payout ratio of 80 per cent of underlying profit saw investors add nearly 10 per cent to the market capitalisation of our home-grown gas major on Tuesday.

Fair enough too. It isn’t often that a major resources house becomes, however briefly, a yield play. But, all things being equal, a rise in the ratio from last year’s 53 per cent should see Woodside’s dividend yield easily cross the 5 per cent threshold this year.

Speculation that mining’s kingpins may follow same path

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To put that into some context, that is some leagues ahead of the likes of
Rio Tinto
and
BHP Billiton
, whose yields are expected to run in the 3 per cent range for the foreseeable future.

Woodside’s initiative inspired considerable speculation that mining’s kingpins might follow the same path to improving the mood of their investor relations.

But I wouldn’t be holding my breath. The fact is that both Rio and BHP have already committed pretty much all of their 2013 cash flows to expansion and, barring any sudden and costly changes of heart, they would seem to have very little room to sustain a move on the capital management front.

It is interesting to note that this pressure to return some of the growth premium to shareholders on the basis that they might be able to deploy the capital more efficiently has leaked into the banking sector.

We read, admittedly with some amazement, that
Australia and New Zealand Banking Group
’s Mike Smith is being pushed by some to make a profitable exit from his Asian businesses on the basis that their returns do not match those that could be generated here.

The first thing to say about this idea is that Smith has always made it quite clear that Asia was a differentiating growth story but one that would require patience and a realignment of expectations on rates of return.

The second is that an early cash-out of Asia would surely require the replacement of the CEO and the board that supported the strategy he was hired to roll out. And, frankly, I cannot see that happening.

Transition of ambition

As for Woodside, it was made abundantly clear on Tuesday that this 80 per cent dividend payout ratio policy will last only as long as it has no more constructive ways to flex the muscle of its new cash-flow base.

In other words, once Coleman has finished redesigning Woodside to reflect his rather more geographically diversified view of the LNG world, we can expect management to claw back its share of the Pluto booty.

That Woodside is in the grip of a serious transition of ambition becomes ever clearer. Coleman has delivered on his commitment to earnest review of Woodside’s growth options and found the bulk of them wanting in some way or other.

At the same time, he has delivered on a commitment to release Woodside from the geographic constraints of strategies past. So it is that Woodside (government willing) has its claws on the export phase of the Leviathan prospect and has put its name forward to build the Grassy Plains LNG project in Canada’s British Colombia.

But, whatever the future holds, we now know that the vaulting Voelte Woodside is a beast retired. Browse is back on the shelf and so are plans to add capacity enough to fill the physical footprint of the Pluto project. There is space for five trains but Woodside will sit on its one until there is gas enough to justify addition to the one it has put on the site.

These cornerstones of ambitions shelved share defining problems, some made obvious, some not so.

The issue most naked is that whatever Woodside builds in Australia will be likely expensive when compared with competitor projects elsewhere in the world.

The problem less discussed, particularly when it comes to Browse, is that both projects are resource constrained. The total resource supporting Browse is about a third the size of that supporting Chevron’s Gorgon project. And the exploration program aimed at providing gas enough to support Voelte’s expectations for Pluto simply have never delivered.

Over the past five years, Intrepid has spent the better part of $100 million defining Tujah Bukit in East Java as one of the world’s greatest untapped gold and copper resources.

Unfortunately for Intrepid and its owners, in May last year their 80 per cent of the hot prospect was transferred into a new ownership structure that did not include them.

The new “owners" include a host of the rich and powerful in Indonesia, the most prominent of them a local billionaire named Edwin Soeyadjaya and an Indonesian investment fund called Provident Capital Partners that is run by Australian expat Gavin Caudle.

Not surprisingly, Intrepid has challenged the validity of this change of hands, most recently launching an appeal in the State Administration Tribunal of Surabaya while finalising plans to take the matter to arbitration before courts in Singapore.

At the same time, Intrepid’s management has attempted to investigate its options with Soeyadjaya’s people and with the man himself.

The opening gambit from those purporting to be the new owners of Tujah Bukit was to offer Intrepid its money back along with a 1 per cent royalty of future revenues.

That offer was never formalised in part because it was curtly rejected by Intrepid.

Back story

Now, the back story here is complicated, obscure and potentially very dark indeed, given that Intrepid has called in the police to investigate claims of embezzlement and theft.

But to a degree, the back story doesn’t matter a whole lot now. What matters is where Intrepid goes from here rather than the hows and whys of its mess.

Quantum, which bought its 1.2 per cent of Intrepid in the wake of last May’s setback and which says it is a value fund and nothing like the hedge fund we have been calling it, argues that Intrepid’s failures past and present demand change.

Quantum argues that Intrepid spent too hard, too early on defining Tujah Bukit and that it then failed to secure direct ownership of the asset once that became possible with a change of foreign investment rules in 2010.

I am not sure that anyone could really disagree with this position.

Where there is a contest though is on Quantum’s view that Intrepid’s response to this ugly situation has been hostile, legalistic, far too public and ultimately self-defeating.

Quantum is urging a return to productive negotiation that would likely require a lowering of the incumbent board’s bottom line, which is retaining majority ownership and operation control of what they insist is their project.

The way the rules work, Intrepid has 42 days of clear air before it faces Quantum’s challenge. And I reckon we might see the incumbents engineer a very serious and very public effort at settling this whole thing some time before it faces the Quantum music.